State Bank of India chairman Pratip Chaudhuri, yet again, took on the Reserve Bank of India (RBI) today, saying saying CRR is a "waste" for the economy and successive interest rate cuts by central bank have failed to contain inflation.
"Of course, I am an incurable optimist and I had expected a 50 basis points CRR cut. I still hold that CRR is a waste for the economy," he said after RBI Governor D Subbarao unveiled the half-year review of the credit policy which had a 0.25 per cent cut in CRR.
"But anyway it (CRR) has been cut by 25 basis points and governor had his own reasons and his own compulsions to see the inflation down," he said.
This is not the first time the head of the largest bank has had a run-in with the RBI. Chaudhuri had raised the issue of CRR in August too, but was vehemently countered by RBI Deputy Governor K C Chakrabarty.
"If the SBI Chairman is not able to do business as per our regulatory environment, he has to find some other place," Chakrabarty had said.
Chaudhuri also said that the higher interest rate regime of the RBI had done nothing to rein in inflation.
"Today's inflation is cost push and not demand pull, and trying to address that with higher interest rates in not helpful," Mr Chaudhuri said at the bankers' press conference post the RBI policy. The SBI chair also reiterated his demand to do away with the cash reserve requirement (CRR) -- the amount of deposits that lenders must keep with the central bank.
This is not the first time the head of India’s largest commercial bank has had a run-in with the country’s central bank. Mr Chaudhuri had raised the issue of CRR in August too, but was rebuffed by K.C. Chakrabarty, a Deputy Governor with RBI.
"If the SBI chairman is not able to do business as per our regulatory environment, he has to find some other place," Mr Chakrabarty had said.
The standoff took a humorous turn when RBI Governor Duvvuri Subbarao told a banking event in September that a committee would be set up to debate on whether CRR should be done away with, and that the members of that committee included Dr. Chakrabarty and Mr Chaudhuri.
"Both of them will be locked up in a room, will not be released until they have reached a conclusion, and the timeframe is that they will not submit their report before my term as governor is over," he added, and the audience broke into laughter.
(With inputs from agencies)
"Of course, I am an incurable optimist and I had expected a 50 basis points CRR cut. I still hold that CRR is a waste for the economy," he said after RBI Governor D Subbarao unveiled the half-year review of the credit policy which had a 0.25 per cent cut in CRR.
"But anyway it (CRR) has been cut by 25 basis points and governor had his own reasons and his own compulsions to see the inflation down," he said.
This is not the first time the head of the largest bank has had a run-in with the RBI. Chaudhuri had raised the issue of CRR in August too, but was vehemently countered by RBI Deputy Governor K C Chakrabarty.
"If the SBI Chairman is not able to do business as per our regulatory environment, he has to find some other place," Chakrabarty had said.
Chaudhuri also said that the higher interest rate regime of the RBI had done nothing to rein in inflation.
"Today's inflation is cost push and not demand pull, and trying to address that with higher interest rates in not helpful," Mr Chaudhuri said at the bankers' press conference post the RBI policy. The SBI chair also reiterated his demand to do away with the cash reserve requirement (CRR) -- the amount of deposits that lenders must keep with the central bank.
This is not the first time the head of India’s largest commercial bank has had a run-in with the country’s central bank. Mr Chaudhuri had raised the issue of CRR in August too, but was rebuffed by K.C. Chakrabarty, a Deputy Governor with RBI.
"If the SBI chairman is not able to do business as per our regulatory environment, he has to find some other place," Mr Chakrabarty had said.
The standoff took a humorous turn when RBI Governor Duvvuri Subbarao told a banking event in September that a committee would be set up to debate on whether CRR should be done away with, and that the members of that committee included Dr. Chakrabarty and Mr Chaudhuri.
"Both of them will be locked up in a room, will not be released until they have reached a conclusion, and the timeframe is that they will not submit their report before my term as governor is over," he added, and the audience broke into laughter.
(With inputs from agencies)
